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Understanding the SCOA

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Did you know that there are over 100 different ways to describe revenue in accounting charts, and more than 800 ways to describe expenses?

The Standard Chart of Accounts (SCOA) provides a common approach to capturing financial information, enabling government departments and other grant makers to talk the same accounting language as not-for-profit (NFP) community organisations. Its effect is to simplify and streamline the financial reporting requirements for NFP community organisations.

The SCOA consists of a set of accounts, and provides a data dictionary for guidance on how to process transactions. Standardising accounting terms and definitions, the SCOA simplifies the financial reporting requirements for NFP community organisations.

The SCOA is of particular benefit to small to medium-sized community organisations that may not have their own accounting department, or access to a sophisticated accounting system.

State-based SCOAs

Many government departments and agencies use different language and accounting requirements in their funding arrangements with NFP community organisations. These variations can result in significant compliance costs for NFP community organisations that have funding agreements with different government departments and agencies.

Recognising the problems caused by varying accounting terminology and categories, the Queensland University of Technology developed state-based SCOAs for governments in New South Wales, Queensland, Western Australia and, most recently, Victoria.

National SCOA

In late 2009, the Council of Australian Governments (COAG) agreed to the development and implementation of a National SCOA for use by governments in their activities with NFP organisations receiving government funds.

COAG has recommended that from 1 July 2010, each state and territory, where possible, implement a National SCOA. The National SCOA is to be based on the Victorian SCOA, with variations relating only to differences in state-based legislation.

During 2010–11, these differences in state legislation will be harmonised, and from 1 July 2011, the National SCOA will be implemented across all levels of government in all states and territories.

The National SCOA will not be mandatory for NFP organisations, but it is recommended that organisations do align their charts with the National SCOA when it is implemented.

In aligning their existing charts, NFP organisations stand to benefit more fully from the reduction in regulatory burden offered by the National SCOA.

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